The incentive effects of various legal rules governing liability for accidents have been the subject of both social scientific and policy debate. Interest has focused especially on the deterrent effect of a legal rule of strict liability relative to one of negligence or negligence with contributory negligence. During recent years, scientists have developed economic theories of accident law which predict the deterrent effects of various legal rules. Verification of these models by econometric techniques has been hampered, however, by a scarcity of relevant data. Much of the most relevant information is unavailable in naturally occurring data sources. Drs. Schotter and Kornhauser are investigating experimentally the theory of bilateral accidents and the behavioral implications of the liability laws governing them. A bilateral accident is one which is determined by the actions of two parties (i.e. their choice of caution levels). Motorist- pedestrian accidents exemplify this phenomenon. The investigators will perform a series of experiments to test how the basic forms of liability--strict liability (with a defense of contributory negligence) and negligence rules--affect the accident-preventing behavior of potential injurers and potential victims. The experiments will involve 35 rounds of 18 different experiments which ask a pair of subjects to choose levels of caution and levels of activity. At the end of each round subjects lose or receive money, depending on their activity level, their standard of caution, and whether or not they are victims or injurers and are or are not liable. This research will extend the investigators' earlier research on the theory of unilateral accidents. Unilateral accidents are accidents in which the actions of only one agent, the injurer, determine the probability of an accident (i.e. an airplane crash). In that research the investigators presented results refuting a number of hypotheses existing in the literature about the impacts of various liability laws. Using a measure of efficiency, a negligence rule outperformed a rule of strict liability. The aim of this research is to see if these results generalize to the behavior of subjects in bilateral accident experiments. The results of this study should be important from both a theoretical and policy perspective on a vital topic at the intersection of law and economics.

National Science Foundation (NSF)
Division of Social and Economic Sciences (SES)
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Lisa Martin
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New York University
New York
United States
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